Best foot for­ward is right fit for busi­ness

Four abid­ing tenets have ruled life and busi­ness alike for Luen Thai Hold­ings CEO Henry Tan, as he re­counts to So­phie He.

Henry Tan, chief ex­ec­u­tive of­fi­cer of gar­ment man­u­fac­turer Luen Thai Hold­ings Ltd, said in­tegrity, trust­wor­thi­ness, ded­i­ca­tion and dili­gence de­fine his busi­ness phi­los­o­phy and also the core val­ues of the com­pany.

Luen Thai is a fam­ily busi­ness, the big­gest por­tion of which in­volves man­u­fac­tur­ing — also the ma­jor por­tion of their Hong Kong-listed busi­ness (Luen Thai Hold­ings), Tan told China Daily.

In re­cent years, Luen Thai has also ven­tured into re­tail and real es­tate on the Chi­nese main­land, and the com­pany has a large fish­ing busi­ness in the Pa­cific, un­der the um­brella Luen Thai In­ter­na­tional Group, he added.

“(In) the whole man­u­fac­tur­ing busi­ness, we em­ploy about 45,000 employees glob­ally, and the turnover is about $1.2 bil­lion ev­ery year.”

Tan, 62, has been work­ing for the fam­ily busi­ness since he was 19. He has a Mas­ter’s in Busi­ness Ad­min­is­tra­tion and a Bach­e­lor’s in Busi­ness Ad­min­is­tra­tion from the Univer­sity of Guam, which awarded him an hon­orary Doc­tor of Hu­mane Let­ters de­gree in 2013. “I went to Guam be­cause the fam­ily has a ship­ping busi­ness there, we were a ship­ping com­pany back in 1965, and my fa­ther asked me to go to Guam.”

Work­ing in the fam­ily is good, Tan said, but ad­mit­ted it also has its chal­lenges. His broth­ers and sis­ters work to­gether, and they of­ten get to­gether to “brain­storm”.

“There is a Chi­nese say­ing: It’s much eas­ier to break a pair of chop­sticks than to break a bunch. I think it is true.”

He said the fam­ily busi­ness has now di­ver­si­fied into many sec­tors as his six sib­lings have di­verse busi­nesses in dif­fer­ent places. He re­called that his fa­ther used to tell him and his sib­lings that they have to be hon­est, trust­wor­thy and dili­gent in what­ever busi­ness they un­der­take.

“It has helped me a lot in my ca­reer and in my life, be­ing hon­est makes peo­ple trust you; things don’t hap­pen nat­u­rally, you have to be hard­work­ing to achieve what you need, th­ese are the core fam­ily val­ues that we have,” said Tan.

Tan said that cur­rently some of his four chil­dren are also work­ing for the fam­ily busi­ness, mostly in Hong Kong, while one is about to move to Shang­hai, to help with the re­tail busi­ness, as Shang­hai is the cen­ter of the main­land re­tail mar­ket. “They are all great kids, I am really proud of them,” He said.

Stead­fast in­tegrity, trust­wor­thi­ness, ded­i­ca­tion and dili­gence also make up Tan’s busi­ness phi­los­o­phy, and he en­cour­ages his ex­ec­u­tives and employees to achieve the same stan­dards.

Tan said he re­lies on the com­pany’s in­cen­tive sys­tem to keep employees mo­ti­vated. “We need to make all our employees feel that this is their busi­ness, so we have an in­cen­tive scheme, to mo­ti­vate them to hit the tar­get.”

Tan said that dur­ing the past two decades or so, many things have changed in the man­u­fac­tur­ing busi­ness.

“We are sell­ing gar­ments and bags. In the old days, the ma­jor por­tion of our man­u­fac­tur­ing busi­ness was on the Chi­nese main­land. With costs in­creas­ing dur­ing the past few years, we have con­tin­ued in di­ver­si­fy­ing our pro­duc­tion base in South­east Asia,” he said.

Tan said that the com­pany op­er­ates in the Philip­pines, Viet­nam, Cam­bo­dia and In­done­sia, and also in In­dia and Bangladesh.

“We used to have 70 to 80 per­cent of our pro­duc­tion ca­pac­ity on the Chi­nese main­land. Now, 60 per­cent is over­seas and I do ex­pect our over­seas pro­duc­tion to con­tinue to in­crease.”

In re­cent years, Luen Thai has ex­panded into bag man­u­fac­tur­ing — pro­duc­ing for up­scale brands in­clud­ing Coach, Michael Kors and Kate Spade. It also makes a va­ri­ety of com­puter bags and back­packs.

Slightly un­der 50 per­cent of Luen Thai’s gar­ments and bags are sold to the United States, 30 per­cent to Europe, and 20 per­cent in Asia, mainly on the Chi­nese main­land and Ja­pan, said Tan.

“In re­cent years,

the changes, it’s not just costs, you must have heard about the Trans-Pa­cific Part­ner­ship ( TPP) which was re­cently agreed by 12 na­tions. It is our be­lief that pro­duc­tion will be moved to where it is duty-free.”

Duty rate for gar­ments and bags is be­tween 10 and 30 per­cent, said Tan, stress­ing that the mar­gin for man­u­fac­tur­ing busi­ness is not so high. There­fore he be­lieves that pro­duc­tion will con­tinue to shift to duty-free lo­ca­tions.

Viet­nam will be the big­gest ben­e­fi­ciary of the TPP, and a lot of pro­duc­tion will move to that coun­try as it is du­tyfree, he said. Luen Thai has some pro­duc­tion fa­cil­i­ties in Viet­nam, but a large por­tion of pro­duc­tion takes place in the Philip­pines.

“We will con­tinue to ex­pand in those coun­tries; as for bag man­u­fac­tur­ing, in the Philip­pines, Cam­bo­dia and In­done­sia, bags will be duty-free.”